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All that glitters is profit

When the poorest of India’s poor have to be displaced to make way for such mines, they will scarcely be rehabilitated to their satisfaction, Darryl D’Monte.

india Updated: Nov 27, 2007 20:47 IST

The Supreme Court’s decision to veto the Vedanta Alumina company from proceeding with its Rs 4,000 crore bauxite mining project in Lanjigarh, Orissa, will prove at best a partial victory for the opponents of the project. It is a pity that it required the apex court to pronounce a verdict on a controversial project regarding which the state government should have been more circumspect. Orissa is one of the biggest recipients of foreign direct investment in the country, thanks to its abundant mineral resources. Many believe that the entire state is up for sale. The controversial former Chief Minister J.B. Patnaik once boasted that he would launch “1,000 industries in 1,000 days”. Two years ago, the South Korean steel company, Posco, signed a $ 12 billion deal — the biggest ever in the country.

The court has reiterated that the principle of sustainable development ought to be applied to such projects. This means that the needs of future generations cannot be compromised for immediate gain. In the specific case of bauxite, the raw material for aluminum, it is doubtful whether a case can ever be made out for that the project is environmentally sustainable, at least in a country where remote mining areas are inhabited by tribals (including Australia). For a quarter of a century, projects like the Gandhamardhan mine developed by Nalco has faced opposition from tribals in Orissa. Utkal Alumina, a joint private sector project with Norsk Hydro of Norway, was abandoned for similar reasons.

When the poorest of India’s poor have to be displaced to make way for such mines, they will scarcely be rehabilitated to their satisfaction. Utkal Alumina was located in Rayagada district, near Kalahandi, which is synonymous with deaths due to starvation and the most gut-wrenching misery in the country. When bauxite is converted into aluminum, it is one of the most electricity-intensive processes. In a region where people do not even have enough to eat, the diversion of their natural resources to this most profligate use can never be termed sustainable by any definition. As it happens, bauxite in this region is found on hilly plateaus, which are also the source of rivers, their lifeline.

Moreover, the SC has looked at the letter of the law and penalised Vedanta for incurring the displeasure of the Norwegian Government Pension Fund, which withdrew its tiny stake in the project. It has permitted Vedanta’s subsidiary, Sterlite Industries, to operate the mines, subject to certain conditions. While some Norwegians have behaved responsibly, it is no accident that Norway, with its vast electricity resources, invests heavily in the aluminum industry as a world leader, as Utkal Alumina indicates. The Pension Fund has a Council of Ethics, which the industry appears to do without, or else it would not associate itself with the exploitation of the poorest people. It has found that the company has been guilty of violating environmental laws and human rights, concerns which do not give the Orissa government any sleepless nights.

The conditions themselves are not likely to assuage the fears of environmentalists. The so-called ‘compensatory’ Rs 55 crore afforestation programme — ‘a tree (or more) for a tree’ — does not address the problem. Trees don’t add up to cubic metres of timber but represent an ecological resource. Without the bio-diversity of a natural forest, not only is nature compromised but forest dwellers denied their minor forest produce, which sustains them in distress, almost a permanent feature of life in these most impoverished regions. And if bio-diversity is lost, how will wildlife, for which the court has stipulated that another Rs 53 crore should be spent, be sustained? Only the stipulation that Sterlite should cite the number of locals who will be permanently employed in the project is praiseworthy; they should be trained for the purpose.

There is a danger of anyone who opposes mines — and, for that matter, dams, nuclear plants and any other large-scale development project — being dubbed an eco-fundamentalist. Critics will argue that a modern state needs irrigation, electricity, aluminum and the like and, further, that some people have to bear the cost. It has been calculated that some 50 million have been displaced by such projects since independence, some more than once. The fundamental question, therefore, remains, who pays and who benefits? One has only to recall the recent disclosure from National Sample Survey data that 77 per cent of all Indians spend less than Rs 20 a day to seek the answer.

As it happens, all mining companies have one of the worst records when it comes to bad economics, environmental crimes and human rights violations. And, the aluminum industry is far from an exception. One of the worst instances is the case half a century ago of the Kaiser Corporation, which lobbied for the Akosombo dam on the Volta river in Ghana, to obtain hydroelectricity to convert bauxite into alumina. Virtually, all the electricity generated was to be used by Kaiser. President Kwame Nkrumah pressed for this $ 200 million project in 1959. US politicians opposed the project on the ground that Nkrumah was a communist, in their opinion. Ultimately, Nkrumah asked Jawaharlal Nehru to intervene, successfully, on the misguided conviction that this “temple of today” would benefit Ghana.

Kaiser paid a fraction of the cost of electricity at the time and the dam displaced 80,000 people. Revenue from the dam hardly covered interest payments and operating costs, and Ghana faced power shortages. It had to borrow money to build smaller dams and later imported power from its neighbours. The same story has been repeated in Mozambique. An aluminum smelter has been set up with World Bank credit and is owned by MNCs. It will be powered by a decades-old dam that has left the country with a multi-billion dollar debt, which in turn is getting paid off by a fraction of the sales of aluminum. The lion’s shares of revenues will feed the British and Japanese companies that control the plant. Meanwhile, people living next to the dam are purchasing their power, if at all, from other countries, which offer cheaper rates.

Rio Tinto, which has acquired Alcan and is interested in mining bauxite in India, is now among the world’s most powerful mining corporations, with joint ventures in 40 countries. It owned half of CRA — Conzinc Rio Tinto of Australia — which itself had assets of $ 4 billion in 1988. That year, the Economist estimated that it produced 11 per cent of the world’s aluminum, apart from other metals. Aluminum products have consistently ensured that it makes big profits even in otherwise hard times. The link-up with CRA has brought Rio Tinto into alliance with the Kaiser family.

According to critics, Rio Tinto’s financial ‘killings’ depend on the low price of labour, negligible environmental costs, political backing to override objections like aboriginal sacred sites, generous tax allowances and leases which are dirt cheap. Its mines in South Africa paid wages well below rates fixed by the authorities. The Weipa bauxite mine in north Queensland, Australia (the world’s largest of its kind), functioned under an Act of Parliament which imposed a royalty of 5 cents a tonne — perhaps the lowest in the world. The aboriginal people, whose land was seized, never received a cent in compensation.

Darryl D’Monte is Chairman, Forum of Environmental Journalists of India.